Court concludes administrative overtime exemption did not apply to inside sales representatives
BOSTON – The U.S. Department of Labor stands to recover more than $3.2 million in overtime back wages for more than 700 sales representatives of a Bedford, Massachusetts, plumbing supply company after a federal court agreed with the department and concluded on summary judgment that the employer misclassified the employees as exempt from overtime under the Fair Labor Standards Act.
The parties then agreed to resolve the remainder of the case via a consent judgment, which also forbids the company from retaliating unlawfully against employees who exercise their rights to raise wage complaints with the department. F.W. Webb Co. has appealed to the United States Court of Appeals for the First Circuit.
The department filed suit against F.W. Webb Co. in the U.S. District Court for the District of Massachusetts in 2020, claiming that the employer exempted employees from federal overtime protections improperly and seeking the back wages owed to the workers. The department also alleged that Webb retaliated unlawfully against employees when the company’s senior management sent instructions to employees during the department’s investigation that could have discouraged employees from speaking to the department’s investigators freely. The Department of Labor and F.W. Webb Co. moved for partial summary judgment.
On June 16, 2023, the district court entered summary judgment in favor of the department on the exemption issue, concluding that the inside sales representatives were not administratively exempt from the FLSA’s overtime requirements because they perform the very work that is F. W. Webb Co.’s primary business purpose, namely producing wholesale sales. The district court also found that the company had failed to pay the affected workers overtime back wages since August 2018 and violated recordkeeping provisions of the FLSA.
On Aug. 24, 2023, the court entered a consent judgment and order, incorporating the summary judgment decision. In addition to payment of the back wages owed from Aug. 4, 2018, through June 30, 2023, the order prohibits F.W. Webb Co. from future violations of the FLSA’s overtime, recordkeeping and anti-retaliation provisions.
Under the consent judgment F.W. Webb Co. preserved the right to appeal the court’s summary judgment decision, which it has done. The court also entered an order agreed to by the parties staying certain aspects of the consent judgment, including the requirement that Webb pay any overtime wages during the pendency of any appeal. F.W. Webb Co. has paid the more than $3.2 million in overtime back wages owed and will pay future overtime wages that accrue during the period of any appeal into an account with the court. Those wages will be distributed to employees if F.W. Webb Co.’s appeal is unsuccessful.
“This case shows how aggressively the U.S. Department of Labor will litigate to prevent employers from denying employees their wages by misclassifying them as exempt and retaliating against them,” said Regional Solicitor of Labor Maia Fisher in Boston. “In this case, the court correctly concluded on summary judgment that F.W. Webb’s inside sales representatives are not administratively exempt under the Fair Labor Standards Act. In reaching that conclusion, the court applied the recent favorable decision the department obtained from the First Circuit in Walsh v. Unitil Service Corp.”
The court’s actions follow an investigation by the department’s Wage and Hour Division and litigation by its Office of the Solicitor.
“Employees have a right to be paid their wages, to seek those wages and cooperate with investigators without fear of employer retaliation. The court’s summary judgment decision upholds the FLSA’s protections against employers misapplying the law’s administrative exemption to avoid paying overtime to employees and now opens the way for more than 700 F.W. Webb inside sales representatives to receive their hard-earned overtime wages,” said Wage and Hour Division Regional Administrator Mark Watson Jr. in Philadelphia.
Based in Bedford, Massachusetts, F.W. Webb Co., which sells HVAC and plumbing and heating supplies, bathroom fixtures, pipe valves and fittings, and related equipment to contactors, industry professionals and homeowners, has wholesale establishments located in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.
Learn more about the Wage and Hour Division, including a search tool to use if you think you may be owed back wages collected by the division. The division offers confidential compliance assistance to anyone with questions about how to comply with the law by calling the agency’s toll-free helpline at 866-4US-WAGE (487-9243). The department can speak with callers in more than 200 languages, regardless of their immigration status. Download the agency’s new Timesheet App for iOS and Android devices – free and now available in Spanish – to ensure hours and pay are accurate.
Su v. F.W. Webb Co.
Civil Action No. 20-CV-11450-AK
www.dol.gov
https://www.dol.gov/newsroom/releases/sol/sol20231027
